Officials with Ashford Hospitality Trust spent years defending their strategy of carrying the highest debt levels among publicly traded lodging real estate investment trusts.
But a global pandemic, record-setting downturn in hotel demand and a bankruptcy scare for the company have spurred a change in that strategy.
"I don’t think we’ll be as conservative as some of our peers. There are some public companies that have 10% or 20% leverage. We traditionally were trying to target about 60%. COVID taught us that 60% is probably still too high. So I think we’re probably going to be more consistent with most of our publicly traded peers. Maybe it’s somewhere in the 40s.," Ashford Trust President and CEO Rob Hays said during an interview at the 2021 Americas Lodging Investment Summit.
The REIT continues to work its way back to profitability after hitting depths that forced it to hand back keys to multiple properties, said Jeremy Welter, Ashford's chief operating officer, during the company's second quarter earnings call on Thursday.
"A number of our assets have been able to capitalize on the pent-up leisure demand that we are experiencing," he said. "The Crowne Plaza La Concha Key West increased their hotel [earnings before interest, taxes, depreciation and amortization] for the same quarter by 74% relative to 2019. That's phenomenal."
For the quarter, company officials said they continued to see performance improvements driven by strong leisure travel, which grew month over month throughout the summer.
Comparable revenue per available room was up 372% year over year with a 21.8% increase in average daily rate and a 287.5% increase in occupancy. The company reported a $69.5 million net loss attributable to shareholders for the quarter with adjusted earnings before interest, taxes, depreciation and amortization for real estate of $31.4 million.
As of press time, Ashford's stock was tracking at $16.20 a share, down 37.5% year to date and significantly lower than highs seen in early June exceeding $60 a share. The NYSE Composite Index was up 14.3% for the same period.
Watch the video above for more from HNN's interview with Hays.